Ex-Ante Evaluation of Public-Private Partnerships: Macroeconomic Analysis
Publication: Journal of Infrastructure Systems
Volume 21, Issue 2
Abstract
Public-private partnerships (PPPs) are currently a popular approach for governments to procure social and economic infrastructure. The macroeconomic environment plays a critical role and influences the factors that can lead to the successful delivery of a PPP project. Despite the importance of the macroeconomic environment, limited attention has been paid to ex-ante (that is, before the event, or forecast) evaluation. A review of the normative literature was undertaken, aiming to derive key performance indicators (KPIs) of PPP success. The KPIs were validated by using a vector error correction model. It is suggested that the developed KPIs can be used to evaluate the suitability of the macroeconomic conditions in which a PPP project will be implemented. These KPIs can provide governments and stakeholders with a platform to conduct an effective ex-ante evaluation of PPP projects that will be significant in policy and decision making.
Get full access to this article
View all available purchase options and get full access to this article.
References
Ainsworth, L., and Viegut, D. (2006). Common formative assessments, Corwin Press, Thousand Oaks, CA.
Akintoye, A., and Skitmore, M. (1994). “Models of U.K. private sector quarterly construction demand.” Constr. Manage. Econ., 12(1), 3–13.
Allen Consulting Group. (2007). “Performance of PPPs and traditional procurement in Australia.”, Infrastructure Partnerships Australia, Sydney, Australia.
Amos, P. (2004). “Public and private sector roles in the supply of transport infrastructure and services.” Operational guidance for the world bank staff, Transport paper—1, World Bank, Washington, DC.
Anastasopoulos, P., Florax, R., Labi, S., and Karlaftis, M. (2010). “Contracting in highway maintenance and rehabilitation: Are spatial effects important?” Transp. Res. Part A: Policy Pract., 44(3), 136–146.
Anastasopoulos, P., Islam, M., Volovski, M., Powell, J., and Labi, S. (2011). “Comparative evaluation of public-private partnerships in roadway preservation.” Transportation Research Record 2235, Transportation Research Board, Washington, DC, 9–19.
Auditor-General of New South Wales. (2006). “The new schools privately financed project.”, Sydney, Australia.
Australian Bureau of Statistics (ABS). (2013a). “Australian demographic statistics.” 〈http://www.abs.gov.au/ausstats/[email protected]/mf/3101.0〉 (Nov. 10, 2013).
Australian Bureau of Statistics (ABS). (2013b). “Engineering construction activity, Australia.” 〈http://www.abs.gov.au/ausstats/[email protected]/mf/8762.0〉 (Nov. 12, 2013).
Australian Bureau of Statistics (ABS). (2013c). “Labour force, Australia.” 〈http://www.abs.gov.au/ausstats/[email protected]/mf/6202.0〉 (Nov. 10, 2013).
Australian Bureau of Statistics (ABS). (2013d). “Producer price indexes, Australia.” 〈http://www.abs.gov.au/ausstats/[email protected]/mf/6427.0〉 (Nov. 10, 2013).
Australian Stock Exchange (ASX). (2013). “Stock price indexes, Australia.” 〈http://www.asx.com.au〉 (Nov. 12, 2013).
Australian Treasury. (2009). “Australia’s response to the global financial crisis.” 〈http://www.treasury.gov.au〉 (Nov. 10, 2013).
Baccarini, D. (1999). “The logical framework method for defining project success.” Proj. Manage. J., 30(4), 26–32.
Barretta, A., and Ruggiero, P. (2008). “Ex-ante evaluation of PFIs within the Italian health-care sector: What is the basis for this PPP?.” Health Policy, 88(1), 15–24.
Blanc-Brude, F., Goldsmith, H., and Valila, T. (2006). “Ex ante construction cost in the European road sector: a comparison of public-private partnerships and traditional public procurement.”, European Investment Bank, Luxembourg.
Chan, A. P. C., and Chan, A. P. L. (2004). “Key performance indicators for measuring construction success.” Benchmarking Int. J., 11(2), 203–221.
Chan, A. P. C., Lam, P. T. I., Chan, D. W. M., Cheung, E., and Ke, Y. (2010). “Critical success factors for PPPs in infrastructure developments: Chinese perspective.” J. Constr. Eng. Manage., 484–494.
Cheung, E., Chan, A. P. C., and Kajewski, S. (2012). “Factors contributing to successful public private partnership projects: Comparing Hong Kong with Australia and the United Kingdom.” J. Facil. Manage., 10(1), 45–58.
Coulson, A. (2008). “Value for money in PFI projects: A commentary on the U.K. treasury guidelines for public sector comparators.” Public Admin., 86(2), 483–498.
Dart, J., Petheram, R. J., and Straw, W. (1998). “Review of evaluation in agricultural extension.” Rural Industries Research and Development Corp., Barton, Australia.
Department for Transport. (2002). “Public sector comparators factsheet.” 〈https://www.gov.uk/government/publications?departments[]=department -for-transport〉 (Aug. 2, 2012).
Dickey, D. A., and Fuller, W. A. (1979). “Distributions of the estimators for autoregressive time series with a unit root.” J. Am. Stat. Assoc., 74(366), 427–431.
Duffield, C. F. (2005). “PPP in Australia.” Public private partnership: Opportunities and challenges, S. T. Ng, ed., Centre for Infrastructure and Construction Industry Development, University of Hong Kong, Hong Kong, 5–14.
Engle, R. F., and Granger, C. W. J. (1987). “Co-integration and error correction: Representation, estimation and testing.” Econometrica, 55(2), 251–276.
European Commission. (2001). Ex ante evaluation: A practical guide for preparing proposals for expenditure programmes, European Commission, Brussels, Belgium.
European Commission. (2003). Guidelines for successful public-private partnerships, European Commission, Brussels, Belgium.
European Investment Bank. (2004). The EIB’s role public-private partnerships (PPPs), European Investment Bank, Luxembourg.
European Investment Bank. (2012). The guide to guidance: how to prepare, procure and deliver PPP projects, European Investment Bank, Luxembourg.
Fama, E. F., and Gibbons, M. R. (1982). “Inflation, real returns and capital investment.” J. Monetary Econ., 9(3), 297–323.
Fan, R. Y. C., Ng, S. T., and Wong, J. M. W. (2010). “Reliability of the Box-Jenkins model for forecasting construction demand covering times of economic austerity.” Constr. Manage. Econ., 28(3), 241–254.
Farbey, B., Land, F., and Targett, D. (1992). “Evaluating IT investments.” J. Inf. Technol., 7(2), 109–122.
Fitzgerald, P. (2004). “Review of partnerships Victoria provided infrastructure.”, Growth Solutions Group, Melbourne, Australia.
Goh, B. H. (1996). “Residential construction demand forecasting using economic indicators: A comparative study of artificial neural networks and multiple regression.” Constr. Manage. Econ., 14(1), 25–34.
Goh, B. H. (1999). “An evaluation of the accuracy of the multiple regression approach in forecasting sectoral construction demand in Singapore.” Constr. Manage. Econ., 17(2), 237–241.
Granger, C. W. J., and Newbold, P. (1974). “Spurious regression in econometrics.” J. Econom., 2(2), 111–120.
Grimsey, D., and Lewis, M. K. (2004). Public private partnerships: The worldwide revolution in infrastructure provision and project finance, Edward Elgar, Cheltenham, U.K.
Grimsey, D., and Lewis, M. K. (2005). “Are public private partnerships value for money?” Account. Forum, 29(4), 345–378.
Haskins, S., Gale, D., and Kelly, L. (2002). “Creating and optimizing new forms of public-private partnerships in Seattle.” Water Sci. Technol. Water Supply, 2(4), 211–218.
Henjewele, C., Sun, M., and Fewings, P. (2011). “Critical parameters influencing value for money variations in PFI projects in the healthcare and transport sectors.” Constr. Manage. Econ., 29(8), 825–839.
Hillebrandt, P. M. (1985). Economic theory and the construction industry, 2nd Ed., Macmillan Press, London.
Hodge, G. A. (2004). “The risky business of public-private partnerships.” Aust. J. Public Administration, 63(4), 37–49.
Huang, Y, and Liu, C. (2010). “A-REIT price responses to cash rate changes.” AUBEA 2010: Construction Management(s): Proc., 35th Australasian Universities Building Education Association, University of Melbourne, Melbourne, Australia.
Hui, E. C. M., and Yue, S. (2006). “Housing price bubbles in Hong Kong, Beijing and Shanghai: A comparative study.” J. Real Estate Finance Econ., 33(4), 299–327.
Infrastructure Australia. (2012). “Australia’s public infrastructure: Part of the answer to removing the infrastructure deficit.” 〈http://www.infrastructureaustralia.gov.au/publications〉 (Nov. 23, 2013).
Irani, Z., Sharif, A., and Love, P. E. D. (2001). “Transforming failure into success through organizational learning: an analysis of a manufacturing information system.” Eur. J. Inf. Syst., 10(1), 55–66.
Irani, Z., Sharif, A., and Love, P. E. D. (2005). “Linking knowledge transformation to information systems evaluation.” Eur. J. Inf. Syst., 14(3), 213–228.
Jiang, H., and Liu, C. (2011). “Forecasting construction demand: A vector error correction model with dummy variables.” Constr. Manage. Econ., 29(9), 969–979.
Johansen, J., and Juselius, K. (1990). “Maximum likelihood estimation and inference on cointegration—With applications to the demand for money.” Oxford Bull. Econ. Stat., 52(2), 169–210.
Kormendi, R. C., and Meguire, P. G. (1985). “Macroeconomic determinants of growth: Cross-country evidence.” J. Monetary Econ., 16(2), 141–163.
Kwak, Y. H., Chih, Y. Y., and Ibbs, C. W. (2009). “Towards a comprehensive understanding of public private partnerships for infrastructure development.” California Manage. Rev., 51(2), 51–78.
Li, B., Akintoye, A., Edwards, P. J., and Hardcastle, C. (2005). “Critical success factors for PPP/PFI projects in the U.K. construction industry.” Constr. Manage. Econ., 23(5), 459–471.
Liautaud, G. (2004). Maintaining roads: Experience with output-based contracts in Argentina, World Bank, Washington, DC.
Liu, J., and London, K. (2013). “Modelling housing supply and monetary policy within the context of global economic turbulence.” Int. J. Strategic Prop. Manage., 17(1), 1–20.
Liu, J., Love, P. E. D., Davis, P. R., Smith, J., and Regan, M. (2014). “Conceptual framework for the performance measurement of public-private partnerships.” J. Infrastruct. Syst., 1–15.
MacDonald, M. (2002). “Review of large public procurement in the U.K.”, HM Treasury, London.
National Audit Office. (2000). Examining the value for money of deals under the private finance initiative, HMSO, London.
Office of Government Commerce. (2002). Green public private partnerships, Office of Government Commerce, Norwich, U.K.
Pakkala, P. (2002). Innovative project delivery methods for infrastructure, Finnish Road Enterprise, Helsinki, Finland.
Public-Private Infrastructure Advisory Facility. (2014). “What are public-private partnerships?” 〈http://www.ppiaf.org/node/89〉 (Oct. 16, 2013).
Quiggin, J. (2004). “Risks, PPPs, and the public sector comparator.” Aust. Accounting Rev., 14(33), 51–61.
Raisbeck, P., Duffield, C., and Xu, M. (2010). “Comparative performance of PPPs and traditional procurement in Australia.” Constr. Manage. Econ., 28(4), 345–359.
Regan, M., Smith, J., and Love, P. E. D. (2011a). “Impact of the capital market collapse on public-private partnership infrastructure projects.” J. Constr. Eng. Manage., 6–16.
Regan, M., Smith, J., and Love, P. E. D. (2011b). “Infrastructure procurement: Learning from private-public experiences ‘down under.’” Environ. Plann. C Government Policy, 29(2), 363–378.
Reserve Bank of Australia (RBA). (2008). “Interest rate decisions–2008.” 〈http://www.rba.gov.au/monetary-policy/int-rate-decisions/2008/index.html〉 (Nov. 11, 2013).
Reserve Bank of Australia (RBA). (2009). “Interest rate decisions–2009.” 〈http://www.rba.gov.au/monetary-policy/int-rate-decisions/2009/index.html〉 (Nov. 11, 2013).
Reserve Bank of Australia (RBA). (2013a). “Gross domestic product.” 〈http://www.rba.gov.au/statistics/index.html〉 (Nov. 10, 2013).
Reserve Bank of Australia (RBA). (2013b). “Interest rates and yields–Money market.” 〈http://www.rba.gov.au/statistics/index.html〉 (Nov. 10, 2013).
Tang, J. C. S., Karasudhi, P., and Tachopiyagoon, P. (1990). “Thai construction industry: Demand and projection.” Constr. Manage. Econ., 8(3), 249–257.
Torvatn, H. (1999). “Using program theory models in evaluation of industrial modernization programs: Three case studies.” Eval. Program Plann., 22(1), 73–82.
Tse, R. Y. C., and Ganesan, S. (1997). “Causal relationship between construction flows and GDP: Evidence from Hong Kong.” Constr. Manage. Econ., 15(4), 371–376.
Victorian Auditor-General. (2013). “Developing transport infrastructure and services for population growth areas.”, Victorian Auditor-General, Melbourne, Australia.
Wong, J. M. W., Chan, A. P. C., and Chiang, Y. H. (2007). “Forecasting construction manpower demand: A vector error correction model.” Build. Environ., 42(8), 3030–3041.
Yong, H. K. (2010). Public-private partnerships policy and practice, Commonwealth Secretariat, London.
Yuan, J., Zeng, A. Y., Skibniewski, M. J., and Li, Q. (2009). “Selection of performance objectives and key performance indicators in public-private partnership projects to achieve value for money.” Constr. Manage. Econ., 27(3), 253–270.
Information & Authors
Information
Published In
Journal of Infrastructure Systems
Volume 21 • Issue 2 • June 2015
Copyright
© 2014 American Society of Civil Engineers.
History
Received: Dec 22, 2013
Accepted: Jun 5, 2014
Published online: Jun 30, 2014
Discussion open until: Nov 30, 2014
Published in print: Jun 1, 2015
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.